Bill operates a boat rental business in a competitive industry. He owns 10 boats and pays $1,000 per month on the loan that he took out to buy them. He rents each boat for $200 per month. The variable cost for each boat rental is $50 . In the off season, Bill should
a. operate his business as long as he rents at least 7 boats per month.
b. operate his business as long as he rents at least 1 boat per month.
c. operate his business as long as he rents all 10 boats each month.
d. raise the price he charges per boat rental.
b
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Contractionary fiscal policy consists of:
a. increased government purchases and increased taxes. b. decreased government purchases and decreased taxes. c. decreased government purchases and increased taxes. d. increased government purchases and decreased taxes.
Recall the Application about the price competition between satellite and cable TV services to answer the following question(s).Recall the Application. In most cases where satellite TV service is introduced in an area with cable TV service, if the price of cable TV decreases, then consumer surplus (in the cable TV market):
A. increases. B. decreases. C. drops to zero. D. becomes negative.